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DTCC and Chainlink Pilot Program Advances Traditional Finance Fund Tokenization


The Depository Trust and Clearing Corporation (DTCC), the world’s biggest settlement system, teamed up with blockchain oracle Chainlink to complete a pilot program that was designed to improve the tokenization of traditional finance funds. This movement which was called the Smart NAV Pilot Program, had big U.S banking companies in it such as JPMorgan and BNY Mellon.

Blockchain Solutions Tested

The pilot, described in a DTCC report dated May 16, was about the standardization of the way how NAV data of funds is provided across blockchains using Chainlink’s CCIP. The report demonstrated the advantages of delivering structured data on-chain and establishing standard roles and processes.

“The pilot realized that by delivering structured data on-chain and creating standard roles and processes, the foundational data could be embedded into a variety of on-chain use cases like tokenized funds and ‘bulk consumer’ smart contracts,” this is what the report said. These innovations are to help the industry explore and power many downstream applications, such as the brokerage application and more automated data dissemination.

Benefits and Participating Institutions

The pilot managed to create a better automated data management system, almost no impact on the existing market practices, customers could get historical data without manual record-keeping and there were broader API solutions for price data. The U. S. banking firms that participated in the pilot include: American Century Investments, BNY Mellon, Edward Jones, Franklin Templeton, Invesco, JPMorgan, MFS Investment Management, Mid Atlantic Trust, State Street, U.S. Bank.

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Market Impact and Future Prospects

DTCC report was followed by Chainlink’s native token, LINK, which jumped 12.5% rise, on a CoinGecko. During the last 12 months LINK has soared by more than 130%, which is such a trend that we witnessed in all cryptos.

BlackRock was the first to release a tokenized money market fund (MMF) on March 19, which is called BUIDL and it runs on the Ethereum network. This fund, that gives native U. S. dollar yields to investors who buy tokens representing shares in the fund which invests in assets like U. S. Treasury bills is available for investment now! The “digital liquidity fund” is the name of BUIDL which operates as an ERC-20 token on the Ethereum blockchain.

The end of the Smart NAV Pilot program is a big step towards combining traditional finance and blockchain technology. Through the partnership with top banking companies, DTCC and Chainlink have created a way for more secure, efficient and transparent financial systems to be built. The industry is still looking into these developments and the chances of using blockchain-based solutions in traditional finance are becoming more and more.

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